Magazine

Management Under the Microscope

A former Amgen CEO argues for a scientific approach to business but goes light on his company's missteps

Science Lessons:

What the Business of Biotech

Taught Me About Management

By Gordon Binder and Philip Bashe

Harvard Business School Press; 292pp; $29.95

When Gordon Binder interviewed for a job at biotechnology startup Amgen (AMGN) in 1982, he had to bite his tongue to keep from asking: "What's biotechnology?" The then-46-year-old Harvard MBA, a veteran of Ford Motor (F) and Litton Industries, had never heard of Amgen and didn't understand the fledgling science of using genetic engineering to create drugs. He took a chance anyway and became CFO. And in the 18 years that followed, Binder, who in 1988 was named CEO, helped turn Amgen from a barely breathing research outfit into the world's largest biotech company, with $3.6 billion in annual sales and a market cap of $60 billion at the time of his retirement in 2000.

Binder's Amgen experiences provide the essence of Science Lessons: What the Business of Biotech Taught Me About Management, co-authored with biographer and health writer Philip Bashe. Yet this is not the usual CEO memoir, something Binder, who now heads both a venture capital fund and jet charter Prime Jet, says he disdains. Instead, he aims to provide a universal guide to management rooted in some of the same scientific principles used to create blockbuster drugs. The book often fulfills this objective, although it would have been better had Binder elaborated on the company's failures as much as he celebrates its successes.

Early in the book, Binder argues that managers should test solutions to workplace problems before implementing them. That's what sales and marketing chief Dennis M. Fenton did in the early 1990s, shortly after Amgen got its first two products on the market. At first, all Amgen sales representatives sold both drugs, even though they were intended for two very different audiences. Anemia remedy Epogen helped those in kidney dialysis, while Neupogen prevented infections in patients undergoing chemotherapy. Fenton, himself a scientist, decided to try an experiment: In each of two districts, he created teams for each of the two drugs. Almost immediately there was a boost in sales. So he restructured the entire sales operation into dedicated forces. Binder deftly follows the anecdote with a guide to designing workplace experiments. (Fenton retired in 2007.)

Science geeks and biotech investors will appreciate Binder's accessible and lucid descriptions of genetic engineering, clinical trials, and the drug approval process. He even provides a tutorial on calculating a company's cash-burn rate—a handy tool for investors, since the research-heavy industry generally consumes more cash than it earns.

However, it's disappointing that there's so little discussion of Amgen's setbacks. In 1985 the company joined with Johnson & Johnson (JNJ) to co-market Epogen in a deal that industry experts still cite as a prime example of how not to form marketing alliances. Amgen gave up the biggest slice of the market, and the deal spurred many legal disputes over marketing rights. Binder doesn't even address the debacle until halfway through the book, and he provides few lessons on how to manage difficult partnerships.

Another troubling part of Binder's legacy was his insistence in the early '90s on shifting much of Amgen's resources into sales rather than R&D. The result: a thin pipeline of new drugs. Binder defends the shift by pointing out that Amgen's labs did make some discoveries during that time, it's just that many of them didn't translate into drugs. To this day, Amgen is still struggling to churn out a reliable stream of products that will match the success of its first two.

Near the end, Binder takes up a classic management challenge: recruiting and retaining star employees. Many of his tips are predictable ("work in teams," "eliminate unnecessary hierarchies"). But there are a few gems based on some unconventional tactics tried at Amgen. Early in his tenure, Binder decided that every major decision would be made in the course of just one meeting, and that all employees with any connection to the issue would be encouraged to attend. The idea was to make everyone feel included and to cut the number of meetings. Sure, the gatherings were crowded, Binder reports, but they were effective. "When you make it clear that you're hell-bent on making a decision...people focus," Binder writes. Science? Perhaps not, but it's a good tip from a legendary—and controversial—biotech CEO.